Schools owed more than $600,000 for utilities work

Friday, Jan. 9, 2004 | 11:31 a.m.

The Clark County School District is owed at least $644,000 in reimbursements for utilities work at school sites -- money that has gone unclaimed because of inadequate oversight by the district's construction department, an internal audit shows.

The district, which has opened at least 10 new schools in each of the last three years, is often the first to install utilities in remote areas.

In many cases that creates opportunities for reimbursement agreements, both from developers who later tap into the district's lines and utilities companies who benefit from the district's work.

But the audit showed the district may have missed opportunities to negotiate better deals and didn't reap benefits that it should have.

A "lack of internal controls and formal policies and procedures" has meant agreed-upon reimbursements have gone unpaid, the audit found. And in at least one case reimbursement rights were incorrectly assigned to a developer instead of the school district, the audit concluded.

The internal audit, obtained by the Sun, was launched this fall after an outside audit of the district's $3.5 billion capital improvement plan revealed that owed reimbursements had gone unclaimed. The money is tied to work on school sites ranging from 1997 to 2003.

"What can I say except, 'I told you so,' " said E. Louis Overstreet, executive director of the Urban Chamber of Commerce and a frequent critic of the district's construction department. "This is just the tip of the iceberg. This is mismanagement of tax dollars at its worst."

But district officials say many of the audit's recommendations for improvements area already being implemented.

Up until this year the construction department has been understaffed, which resulted in"smaller details" such as reimbursements to slip through the cracks, said Lyn Vinson, director of the district's internal audit department.

"Sometimes to get schools open on time we haven't coordinated as well as we should have," Vinson said. "Compared to the total project price (the reimbursements) aren't big costs, but it's obviously costs we should recoup."

The internal audit found:

"The company has a great partnership with the Clark County School District and this is something that we will definitely look into," said Nevada Power spokeswoman Sonya Headen.

At Alamo Elementary School and the new Shadow Ridge High School, the district paid KB Home a total of $374,984 to install water mains. KB Home has established refunding agreements with the Las Vegas Valley Water District for up to $483,873 in reimbursements as new customers attach to the water mains.

The reimbursement agreements should have been with the school district, which paid for the actual work, Fred Smith, construction manager for the Clark County School District said.

Officials from KB Home have been meeting with district staff to address the situation and expect to have a resolution by the end of the month, Smith said. A KB Home spokeswoman confirmed that the company is working with school district officials to resolve the issue.

The district also appears to have lost money by paying for utilities installations largely through change orders after the construction process was well underway, the audit concluded.

The construction department plans to hire two "construction utility specialists" whose jobs will be to develop internal controls, policies and procedures relating to reimbursement agreements and improvements, Smith said.

Carol Vilardo, president of the Nevada Taxpayers Association, said the district deserved credit for conducting the internal audit.

"This is the best way to see what's slipping through the cracks and whether procedures are being followed or not," Vilardo said.